New legal advice shows the UK can take action to significantly reduce the risk of being sued by fossil fuel companies for climate action.
In the week the UK officially withdrew from the controversial Energy Charter Treaty, the independent legal opinion, commissioned by the Trade Justice Movement and Global Justice Now, confirms that the UK could enter into an “inter se agreement” with other countries to neutralise the ECT’s “sunset clause”, a provision which allows investors to continue suing governments for up to 20 years after withdrawal.
The UK’s exit from the Treaty comes 12 months after giving notice of its intention to withdraw, a decision taken following criticism that the Treaty obstructs climate action by protecting fossil fuel investments.
However, without further action, the sunset clause would expose the UK to lawsuits from fossil fuel companies until 2045.
Importantly, the legal advice suggests no new legislation would be needed to ratify and implement such an agreement.
Tom Wills, Director of the Trade Justice Movement, said:
“The Energy Charter Treaty is a serious threat to climate action, giving fossil fuel companies the power to sue governments for billions. The UK’s decision to leave was the right one, but if we don’t deal with the sunset clause UK climate policy will remain under threat. This new legal advice shows there is a credible path to protect ourselves. The government must act now to finish the job.”
The Trade Justice Movement and Global Justice Now are calling on the UK government to urgently pursue an “inter se agreement” with other withdrawing countries, including EU member states, to neutralise the sunset clause and protect against future arbitration claims.
